M&A - Mergers &
Acquisitions

ESOP SYSTEM

Mergers and acquisitions ("M&A"), offer enormous opportunities but they also present massive logistical challenges. The existence of a large number of shareholders and ESOP beneficiaries can make the collection and execution of transaction documentation a labor-intensive task. A transaction involving multi-national companies or between an Israeli entity and a foreign one adds additional layers of complexity to the required documentation, disclosures and tax withholdings. On completion of the transaction, transfers of funds have to be timed exactly so as to be in accordance with: transaction terms, escrow agreements, individual employment contracts and ESOP grant terms, tax regulations and more. Simultaneously, taxes need to be precisely calculated, withheld and submitted complete with proper documentation. And all of this needs to be done in close coordination with the multiple law firms, accounting firms, bankers, other advisors and the entities themselves, all of whom are involved in the M&A process.

ESOP - EXCELLENCE is your One Stop Shop solution for M&A Paying and Escrow Agent and Israel Tax Withholding Agent and related services. Our services are backed by our experienced team including lawyers, tax accountants, economists and financial analysts.

Featured customers

Paying and Escrow Agent Services

Our services include the following:

  • Full and proactive coordination of all activities with all key players.
  • Documentation collection and management
    • Creation and maintenance of a database to track the documentation collection and execution process
    • Collection of transaction documentation and supporting materials from relevant beneficiaries (e.g. shareholders, option holders, employees and service providers)
    • Documentation review and verification that all documents have been correctly executed and that all related supporting materials (e.g. original share certificates or US tax forms) have been provided
  • Funds allocation and distribution
    • Creation of individual trust accounts for each beneficiary
    • Distribution of funds among beneficiary trust accounts in accordance with transaction terms, escrow agreements and individual contract terms
    • Final transfers of funds to beneficiaries

Tax withholding agent services

Our services include the following:

  • Calculation and deduction at source of Israeli tax obligations
  • Deduction of Israeli taxes via ESOP – EXCELLENCE's withholding tax files with the Israel Tax Authority
  • Preparation of and submission to the Israel Tax Authority of all required forms and other documentation
  • If taxes have been deducted, providing the payee with official approval for submission to the Israel Tax Authority

Option Cash-Out Services in M&A Transactions

Existing Equity Incentive programs are frequently terminated and existing grants cashed out as part of the M&A process. Supporting services for this process are designed for each M&A client based on its existing equity incentive plan arrangements, existing grant types, the location of beneficiaries, the nature of the transaction and other relevant factors, all with a view of preserving preferred tax status for beneficiaries. 

Our services include the following:

  • Communication with beneficiaries regarding the cash-out process in general and their specific accounts in particular
  • Holding in trust of shares or cash to be distributed to beneficiaries in accordance with individual grant vesting schedules and remaining holding periods
  • Preparation of all required reports to the Israel Tax Authority in accordance with statutory requirements and any transaction-specific tax rulings
  • Calculation, withholding and submission of taxes due from each beneficiary in respect of their earnings, together with any required forms and documentation
  • Distribution of proceeds to beneficiaries